UPDATE: Vertex Energy (VTNR) PT Raised to $17 at Stifel; 'Renewable Diesel Adds at Least $15 to the Valuation'
Stifel analyst Mike Hoffman raised the price target on Vertex Energy (NASDAQ: VTNR) to $17.00 (from $2.00) while maintaining a Buy rating, saying they value legacy VNTR at $2 and the addition of the Shell refinery with 14K BPD of renewable diesel another $15.
The analyst commented, "We reiterate our Buy rating and raise the target price to $17 on Vertex Energy (VTNR, Buy, $7.81). Legacy VTNR could produce $25mm of EBITDA from the production and sale of Group II base oil and VGO into thelow sulfur marine fuel markets. Legacy EBITDA for distillates from the Shell Mobile Chemical LP Refinery is about $25mm. At 10K BPD renewable diesel could add another $250mm of which about 70% are subsidies and tax credits. VTNR is paying $75mm for the operations, assumes no unusual environmental liabilities and will spend $85mm over 10-12 months to upgrade the hydrocracker to produce Renewable Diesel fuel. The energy value for diesel fuel is about $2; the subsidies are about $5 per gallon. We value legacy VNTR at$2 and the addition of the Shell refinery with 14K BPD of renewable diesel another $15 with an assumption for some walk down of subsidies."